Yeah, sounds like they could have just raised the price of the original. But I guess they are convinced that this would still cannibalise their other offerings, which I suppose monetise better.
So it's more like you having two gas stations next to each other - one with a price per gallon and nothing else, one with a more confusing user experience that yields more dollars per gallon of fuel than a fixed price.
The thing with mobile games is that you make 90% of your money on 0.001% of your players - the big spenders. It's "better" to have a free game where a wealthy player can spend $10k on gems or whatever, than a one-time paid game. It's a sad state of the market, but that's how the big companies make money.
Yes, but if the original non-monetized version is result number 1 or 2 when searching for "angry birds" in the store, then the big spenders might never come across the version you want them to come across. You can't "fix" that by just increasing the price of the original game.